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tv   Street Signs  CNBC  December 14, 2023 4:00am-5:00am EST

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that's all for this edition of "dateline." i'm andrea canning. thank you for watching. ♪ good morning. welcome to "street signs." i'm joumanna bercetche and these are your headlines. naturally begins to be the next question which is when will it be appropriate to dial back the policy strength that's in place. >> federal reserve chairman jay powell says the attention turns to slashes rates with 75 points pencilled in next year. and bond yields tumble with
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similar dovish signals from the ecb and bank of england as they make the last decisions of the years. and inflation pressure are easing, but uncertainty remains high. we hear from thomas jordan this morning. and european leaders meet in brussels with military aid top of the agenda. hungary's viktor orban says long-term funding for ukraine should not fall into the eu budget. >> the money for ukraine is already in the budget. there is no extra decision to give it in short-term. in longlong-term, my position i should give it outside. good morning. it has been a very busy 24 hours for central bank decisions.
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a bit of breaking news. a surprise result from the norges bank. they hiked interest rates completely breaking with the trend of others throwing in the towel on hawkishness. norges hiked from 4.25% to 4.5%. interesting in the context of all of the language that has been coming out, not just of global central banks, but the norges bank as well. the last meeting or back in september, they insinuated one more rate hike in the cycle. some of that language was dialed down in the last couple months. the reason for people turning more dovish on norges bank is lower oil prices as we know the oil complex which dropped in the last couple months. in addition to that, we have seen relatively other banks turning more dovish which is a good signal for the currency, krona, which had been declining
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over the course of the last couple months. in the end, norges bank decided to hike interest rates. surprise to the market and what they are attempting to do is give further support to the currency which has been on the weakening trend i've been talking about. very interesting in the context of what was priced in for the meeting as well as other central banks. we will hear from the governor of the norges bank today at 13:15 cet. i'll ask a lot of questions as request they decided to go for the rate hike. was it currency or inflation expectations? it is not just the norges bank. we have things from the oil side of things. the monthly iea report. it is interesting to see what they have to say about the oil complex.
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let's start with the oil demand growth forecast. the iea actually raised the 2024 global oil demand growth forecast by 130,000 barrels per day to 1.1 million barrels per day citing dp outlook. they trimmed 2023 oil demand growth forecast by 90,000. not much there. let me tell you about the comments about psupply. iea says u.s. oil supply growth continues to defy expectations with output shattering the 20 million barrels per day mark. iea says the extension of opec plus cuts through q1 2024 says this will complicate efforts by key producers to defend market share.
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here, we know clearly that they are referring to opec and opec plus decision to deepen the production cuts and extend them throughout the course of 2024. we saw a marginal reaction in the price of oil, but over the last couple days, there hasn't been enough to prop it up substantially. we know it wasn't that long ago we were talking about the price of $100 for oil. we dropped $25 since then. the trajectory for oil has been a ownward path despite opec plus' best effort. that is the energy market. i talked about central banks. let's go over what the fed did yesterday. a lot of fireworks at play here. a lot of green on the heat map. this was in reaction to the fed yesterday. we went in and nobody expected the fed chair to sound dovish or the dot plot to sound dovish. they increased the number of rate cuts from 50 basis points
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to 75 basis points and they revised down the inflation projections and core pce which was lower for 2024. that gives them the impetus to sound more dovish. they also dialed down some of the wording with language around policy firming and inserting the word any. all of that meant markets took it positively. the s&p at the highest level in two years. dow with a new record high. a tremendous rally in bond yields. two-year treasuries down 30 basis points by the end of the day. biggest daily decline since march. ten-year u.s. treasury closed 18 basis points lower. that meant the hand over was positive. the stoxx 600 is up 1.2%. the heat map is full of green behind me. it is not just the fed. we have other central banks
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coming up today. let's switch to the european board and look at the uk market. we have the bank of new england m england meeting in a couple of hours time. the long here is key. one of the big differences between the uk and other countries is wage growth is still very elevated. although the numbers surprise to the downside, we are still looking at 7.2%. is that justification for them to start sounding dovish? will they sound dovish? will they insinuate rate cuts? big question for the uk market. you see the ftse 100 is doing well up 1.7%. led by the commodities sector and basic resources in particular. in europe, the ecb decision to watch out for. i could say the similar thing for the ecb. one difference is the inflation print has been surprising to the downside. headline inflation coming in at 2.4%. that certainly does give the ecb
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some cover to sound dovish if they want to sound dovish. big question for that meeting. cac 40 is scaling good gains today. in terms of sectors, this is where leadership is coming from this morning. huge rally in real estate up 5.2%. the trade in relation with the bond yields as bond yields rally lower, we will see the reaction in the markets. commodities doing well. travel is cyclical. it is doing quite well. the only sector that is under performing is insurance. as interest rates go lower, liabilities get bigger. not good for the insurance market. chemicals are under performer. let's switch and talk about the yields. rally is phenomenal. the ten-year bund is down 2.05%.
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close to breaking 2% here. remarkable where a month ago we were talking about 3% on the bund. gilts are trading at 4%. now 3.7%. we rallied 30 basis points. italy. everyone was worried about the yield levels for italy. it rallied 18 basis points today. we were at 4% yesterday. huge rally there. one other question for the ecb today is will they decide to move on the investments? if they bring forward the time of the kwquantitative tightenin the market doesn't care today. let's look at u.s. futures. this is the u.s. yield curve. futures are expected to open up again in positive territory. all of the three majors moderately so. it is worth bearing in mind that
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the tech sector under performsed. the magnificent seven wasn't leading the jump yesterday. it was the banking sector. i'll park that thought there. the fed held rates at the 22-year high on wednesday, but fresh forecast gave more dovish outlook. the dot plot shows the central bank is serrfinished hiking. it is looking for a further percentage point in 2024 and 2025. investors priced in 50 basis points of cuts in the next 12 months. jay powell said policymakers do not expect further hikes to be needed. >> we expect to leave rates unchanged. given how far we have come, along with the uncertainties and risks, the committee is proceeding carefully. we will make decisions about the extent of any additional policy firming and how long policy will
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remain restrictive based on the to totality of the data and balance of risks. >> former vice chair and service or richard clarida said powell's comments went further than expected. >> i thought it was a closes call whether or not the dots would show two or three cuts. it was. the change to the statement, appearing to be modest, was significant. the press conference reaffirmed that the fed thinks they're done and they are confident they are done. two weeks ago, the chair was discussing it was premature to talk about rates cuts. now he revealed they are talking about rate cuts. the totality of the comments surprised me. >> the ecb makes its last rate decision of the year at 14:15 cet. it is widely expected to keep rates on hold for the second time in a row.
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watchers will look for any signs that it will be the first of the major banks to cut rates in the new year. inflation has come down sharply in recent months with the headline figure for november closing in on the target level of 2.4%. the core figure is down to just 3.6%. the printout as you see here over the last couple months. deutsche bank is expecting this in the new year and deposit rates to fall from 4% down to 2.5% by the end of 2024. also adainding to the dovish ca the ecb is widely expected to dial back growth expectations when it published the latest forecast today. an annette joins us now. it is exciting to see how dovish
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the fed was yesterday. will the ecb take a leap out of the fed book or the norges book? >> reporter: i think they will stick to the middle ground by not signaling too much of the rate cut as soon as march. if you look back at the last policy meetings, they have been insisting on being data dependent and the recent speeches do point toward the fact that also hawks like schnabel was surprised by the sharp decline and coming back up of inflation. they were still insisting future monetary policy decisions will be data dependent. i guesses this is what we are getting today as well from the ecb. at the same time, as i was explaining before as well, the stop of the reinvestment should come before any rate cuts and
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that is why most likely the ecb will start to announce something like that today or potentially say they are going to do that in january. there is still another meeting between now and march. i guess uncertainty around the inflationary outlook is key for the ecb. clearly, europe is not the united states. europe is much more dependent on energy volatility and energy price volatility. we could well see potentially the oil price going up again and then also that could mean higher energy prices in europe and by that, higher inflation. the labor market is very tight in the euro area and that means potentially higher inflation through the wage channel. it is too early to declare victory here. i guess those who think that march is the time for the first rate cut could be a little bit
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overoptimistic. that's just my take on how the situation is here. i caught up with a board member of deutsche bank who is responsible for germany, but also for asia. he has a wide view on the world and economic activity and inflation development. i asked about the rate cutting cycle for the banking industry. >> the central bank rates will be cut over the course of 2024. that is a realistic one. the good news is that monetary policy does work. it does function. we have seen a sharp decline of inflation in the western world over the last couple of quarters. that gives space for central banks to then create impetus and stimulus later in 2024. call it end of q2 and 2024 onwards to cut rates.
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for us, that means, obviously, our pricing of activities in the assets and liabilities side needs to continue accordingly. i think it is also important to say that it is currently the market expecting takes, but it is consensus oriented that central bank rates will be cut. one should not lose the eye of the fact there are risk factors that might lead to the deviation from the interest rate path. the just one being the inflation not be successfully put back in the bottle, the scope for the central banks to cut rates swiftly will be limited. >> reporter: the markets are astonishingly optimistic about the kpacapacity for the ecb to rates and pricing in more rate
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hikes than in the united states. whether this is going to happen remains to be seen as i was saying inflationary pressure might shoot up again and the ecb has a tendency to be much more vigilant and not so much acting ahead of the curve. we have seen that going into that inflationary period. most likely, we are going to see that as well when we go out of that high inflationary period. that is also because the decision-making process inside the governing council is more complex than inside the fed. >> absolutely. annette, thank you for the overview. we will, of course, get to you later on for the decision. for now, we have our guest here on the set. we have a great overview from annette there. what are you looking from the ecb today? is it mainly about the inflation projections now we have the 2026
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p ones? >> if in our view, it is not quantitative tightening. it is the skbrooutlook for the few months. we think the growth forecast and inflation forecast for this year and next year will be lower. for 2025 and the first time for 2026, we think it will come with the focus of 2.1 and 2%. i think the ecb will perform a fine balancing act today. inflation has come down a lot. somewhat faster than anticipated. we also see that some ecb members such and schnabel pivoted to the dovish tone. today, it is upon the ecb to decide if that is the majority view here or whether the ecb wants to push back against market pricing which is dovish. >> what would incentivize the
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ecb to sound more hawkish or keep the door open to further interest rate hikes? >> a lot of topic. that is clear. the ecb has always said that developments over the next couple months will be important. labor markets in europe are tight. we have seen wage increases. the ecb has said they want more evidence over the course of the spring of 2024 to see whether wage moderation is coming so inflation over the medium term is lower. that is the crux here. we think that by the time of the march meeting, by the time of the april meeting when we have full rate cuts almost priced in, there might not be sufficient evidence. this is where the ecb treads a fine line. >> the momentum is so strong now. it is telling that we have the bond yields up. ten-year italy is down 15 basis points. lagarde hasn't opened her mouth.
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this is in reaction to jay powell yesterday. is there anything she can say to c ca catapult the rally further? >> if she does not push back against the recent moves in rates, the rally will continue further. i think almost to keep it where we are, she needs to push back. >> you said earlier that you don't think it is the time for them or they won't make an announcement on reinvestment or the stopping reinvestments. why not? >> we thought the reinvestment would only be scarce through march. they will wait until next spring. that issuance will be high in january and february. they would not want to announce something today for january. they want to wait a bit longer. it is a fine line. i would not be hugely surprised
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if they did it today. >> is there a paradox to cut interest rates in spring next year and announce qt? >> a bit, yes. we knew there was a time rates are coming lower. that is a dovish move. the ecb would wind down the large balance sheet. it was always clear we would have one foot in cold water and one foot in warm water. >> at the beginning of the year, we were pricedsurprised to the . now the momentum is fizzling out. there are concerns that europe is in the protracted mild recession mode for a while. >> we had a ckcontraction of 0. quarter on quarter. the first quarter may surprise to the upside because labor markets are strong. we think that might support
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household consumption. that is the biggest component of gdp. this may give us a positive boost whereas monetary policy environment and fiscal consolidation are headwinds to growth. >> i was going to ask about the fiscal consolidation. our correspondent in brussels, silvia, has been watching these conversations are an issue. they don't seem to come to agreement. yesterday, germany agreed to the budget. they are reinnstating the debt brake. >> at ubs, we cut gdp forecast for germany yesterday. instead of half a point, we expect 0.3. this is a result of tighter fiscal policy with the constitutional decision. >> you see that happening for the broader eurozone countries
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with the consolidation path? >> we had four years of generous fiscal policy. as of 2024, we will move toward consolidation. >> wonderful to have you on. great to get your views on how things will pan out. chief european economist from ubs. we spoke about the fed, ecb and norges bank, but the swiss bank held rates steady at 1.75%. inflationary pressures have eased, but saying it would continue to monitor inflation closely and adjust possiblicy a needed. we will be hearing from snb governor thomas jordan and the governor from the norges bank shown on the times on the screens ahead. join me as we break the bank of england decision at 12:00 gmt.
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that is followed by the ecb decision time. we will have christine lagarde's pressor at 14:45 cet. busy day for me. eu leaders are arriving for the final meeting of the year. top of the agenda is additional aid for ukraine. silvia joins us from brussels where she is joinings a key player in the discussion. this man has been dominating the headlines. you and i have spoken about him at length. tell us what he said, zsilvia. >> reporter: it is a busy day here in brussels, joulianna. we know this is an important subject for kyiv when they are struggling with the counteroffensive and imminent
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threat that u.s. support will come to an end and further pressure on the eu to deliver for ukraine. we know and we have been speaking about this through the week. so far, hungary is blocking the 50 billion euro disbursement to ukraine. speaking with the prime minister of hungary, it seems there is no change in position from budapest. i want to show you the remarks from the prime minister of hungary who i spoke with moments ago. >> the first is to get the better late than never. second, why we are here is not to make business. it is not about bargains or deals. it is an approach and principle. to give money to ukraine is easy to do because in short-term money for ukraine is in the budget. t there is no extra decision to
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give it in short-term. longer term, my position is we should give it outside. we are not under pressure of the time because the bridging solution is already in the budget. hungary does not connect any issue to ukraine or other issue. >> are you supposed to start next year? that is in the short-term and until 2027. >> next year? that is the european election. we are not behaving democratically to wait on new leaders. >> reporter: so over the last 24 hours, we heard from the european commission, the executive arm of the eu, saying they were disbursing 10 billion euro to hungary out of 30 which had been frozen. hungary has not been respecting the rule of law. when i asked the prime minister of hungary whether those 10 billion would perhaps convince
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him to give further support to ukraine later on today, he actually tried to say this is not linked and one pot of cash is not related to the other. it was interesting to hear that. i posed a similar question to previous leaders earlier today. everybody seems to be dividing both topics. joumanna, timing is interesting. a lot at stake at the european summit. let's see if there is a compromise when it comes to financial aid for ukraine, but also potential talks for kyiv as well. >> it is remarkable what a strong and powerful position mr. orban is playing throughout the discussions and he has managed to ex-ptract the cohesion funds from the eu. silvia, thank you very much for the coverage. coming up on "street signs," markets rally as rate cut bets rise on a key day for central banks. we will break it down coming up
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that's why i chose shipstation shipstation helps manage orders reduce shipping costs and print out shipping labels it's my secret ingredient shipstation the number 1 choice of online sellers and wolfgang puck go to shipstation.com/tv and get 2 months free welcome back to "street signs." i'm joumanna bercetche and these are your headlines. naturally, the next question is when is it appropriate to dial back the policy strength.
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looking to build on wednesday's gains after jay powell signals the peak of the hiking cycle and attention turns so slashes rates. european equities hit the highest since january of 2022 while the cac 40 and the dax hit record highs with european bond yields tumbling. norway's central bank shocks markets and highs rates even as money markets ramp up policy loosening from the ecb and the bank of england. european leaders meet in brussels with military aid top of the agenda. viktor orban says long-term funding for ukraine should not fall into the budget. >> in short term, the money for ukraine is already in the budget. there is no extra decision to give it in short term. in long term and bigger sum of money, my position is that we should give it outside.
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welcome back to the show. who needs santa when you have fed chairman jay powell with the christmas gift? huge rally on wall street overnight. massive rally in bond yields. this is the picture on europe equities today. it is priced into the central bank curves for 2024. the dax and the cac 40 in focus today with the all-time record high for the german and french index. here we are despite the weak macro back drop we have been talking about and the weak progrnosis for 2024. they are doing well. d dax is up .60% and the cac 40 is up .40%. we have the bank of england to watch out for today, too. ftse 100 is 1,170.
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is it is not as close as germany and france? we have wage growth pressure more firm than the rest of europe. whether or not the bank of england changes its tone or signals it is the time to start talking about rate cuts is a big question. as far as markets, first rate cuts priced in sooner for the ecb and fed than the bank of england. in terms of sectors, this is where leadership is coming from. real estate with a rally today in the basket up 6%. interest rate sensitive. interest rates going lower and continuing to go lower in 2024 is positive for the real estate sector. basic resources at 3.5%. did bounce in minors. financial services up 2%. on the flip side, two bits of
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red on the board. telco down 5% and insurance is down .5%. let's talk about the fx market. a weak day for the dollar yesterday. the session down 1% in just one session. quite significant move in the dollar. we are seeing dollar weakness transpire against the pound and euro. both are .30% or .20% firmer against the dollar this morning. the dollar continues to lose ground. on the annual basis, for the year, the dollar is trading flat. we have done a bit of a round trip there. dollar/yen with some strength. . .90%. it is not just the central bank meeting, but the bank of japan is driving that yen. the dollar/yuan is causing a
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surprise. big surprise in yields with the treasuries yesterday. things are looking very strong right now. we have not got the decision from the ecb yesterday. ten-year btp is 18 basis points lower today. remarkable. ten-year bund at 2.0%. another 13 basis points firmer today. you see the u.s. yield curve two-year note is 16 basis points lower. the two-year there'sestreasury saw the biggest decline since march. the ten-year treasury is sitting at the lowest level since march. that was a key signal. le let's look at u.s. futures. wall street seen opening up in the green. positive session from yesterday. overnight session in asia and european markets as well. i forgot to mention the dow is
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sitting at a record high as well. lots of record highs made in the stock market. john leeper joins me. what do you make of the statements from jay powell yesterday? >> a regime change. i think markets moved quite early to start pricing in the declining yields. i think it was going to go one of two ways. either jay powell would push back slightly over concerns of premature easing and financial conditions or what we got is he shifted and met the market. i think this is very positive. as long as interest rates s decline and keeps with the upbeat market. >> this is the manifestation of goldilocks. it is everything that investors would hope for. you have the fed signaling they will start cutting interest
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rates without an actual recession being on tap. cert certainly, few parts of the market are calling for it. where could things go wrong? >> you look at the economic data in q4, we see a drop off in gdp and slight weakness in q2. look at the broader picture over the year with gdp at 2.5. i expect markets will look through that. i that i could potentially be an area of weakness. you are not getting growth from the uk or europe which is fli flirting with recession. with valuations quite high, that is the risk. >> if you had to pick between the two assets classes, you would rather own fixed income than stocks? >> i think fixed income is interesting relative to equities. way we are approaching this is we see more downside risk in
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europe in particular and in the uk where growth is likely to continue to flat line or contract slightly. on that basis, we are leaning in to european government bonds. we are extending duration. in the u.s., we have a short-duration bias all year. that worked well. given our outlook for a more upbeat economy in the u.s., we are playing the yield curve steepening trade. that jumped nicely yesterday. the long-term trajectory as we move out of the inversion and continue to approach more of a normalized yield kecurve over time. >> let's talk about the ecb meeting. you mentioned you are overweight on fixed income. where would the hawkish comments come? the ecb president hasn't spoken yesterday. >> it is positive to hear from
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schnabel. she is a bit of a hawk coming out and saying we don't see much more in the way of -- we're kind of done. that is positive. my main concern is for whatever reason, europe seems to be acting like it is the u.s. it's not. the narrative will come out more over the course of 2024. what they need to do is pivot and pivot sooner. my concern is they continue to hold off over concerns of energy and other aspects. that puts them in a difficult position next year. >> do you think the ecb has overtightened or is policy too restrictive? >> absolutely they overtightened. that's why we are looking for an earlier pivot. it is not all negative news. if i were positive on europe, they have a chaotic labor market. from the labor perspective, that
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is still there. also, in terms of the labor market, u.s. is tight. uk is very tight. there are signs of those labor markets loosening up. in europe, it is a different story. if manufacturing bottoms out slightly and if we see a general rebound, which could benefit europe and european equities are cheap, then that's the positive side of that. >> i'll make a hard pivot here. our colleagues in dubai have been covering the cop28 summit. they talked about the transition away from fossil fuels. that is the first time it was elalluded to elicitly. this opens up a lot of opportunities. you have spoken extensively about the opportunities in nuclear energy. i know this is not what you wanted to come and talk about, but i'm interested in it because i put up a piece earlier this
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year with the europeans differing attitudes. germany phased it out. uk is trying to beef it up again. >> i'm happy you brought this up. this is my favorite topic to talk about. what you are seeing is the u.s. leading the pledge at cop28 to triple nuclear power. originally we ended up being 25. you have the huge demand coming through to achieve net zero energy ambitions, but in a pract pragmatic way. we are getting the pivot. in illinois, the state governor passed a bill ending a 35-year ban on new nuclear reactors. australia has a moratorium on nuclear energy, the four of five in the recent poll supported pivoting back. it is interesting to see the coalition party actually say we support this.
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>> how do you get exposure to it? >> we have been getting exposure to the raw commodity uranium which increased in price consi considerably. it jumped to $85 a pound this week. we believe there is a strong chan chance that it will take a long timeranium to come back online. it will rise to $150 a pound. uranium of the miners in the process aring lagging. you get the huge move in uranium and we will see over the course of the year and nothing will turbo charge it. they will catch up. >> speaking to another analyst at the conference a few weeks ago and his top pick was glencore. john, i have to leave it there.
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wonderful to chat to you. it is quite the mix. john leiper. a couple of other corporate stories for you today. paris media group vivendi is floating a plan to split into three businesses in a bid to maximize value. vivendi has higher discount hitting the valuation and limiting ability to carry out external growth transactions for subs subsidiaries. the stock is trading higher up 4.8%. good news for those holding that stock. air france is seeking to improve by 2 billion eyoeuro ine next five years. another strong reaction in the stock up 5%.
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and bp dismissed ceo bernard looney and withhold money after he knowningingly misled the boa. we have gone through a lot in this show. everything from the fed chair jay powell and comments yesterday and the upcoming ecb decision and norges bank decision. we have spoken about nuclear energy and reaction and stock markets. if you want to get in touch with me, i'm by myself, feel free to tweet me @cnbcjou on x. coming up on "street signs," we are looking ahead to the bank of england rate decision and potentially rate cuts in 2024. we'll be right back.
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first time i connected with kim, she told me that shipstation the her husband had passed.lers and that he took care of all of the internet connected devices in the home. i told her, “i'm here to take care of you.” connecting with kim... made me reconnect with my mom. it's very important to keep loved ones close. we know that creating memories with loved ones brings so much joy to your life. a family trip to the team usa training facility. i don't know how to thank you. i'm here to thank you. welcome back to "street signs." the central bank extravaganza
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today. we are counting down with the central bank all but certain to hold rates after the growth data on wednesday showing 0.3% contraction in october. markets are pricing in 120 points of rate cuts by the end of next year. lots to unpack. we have the portfolio manager and committee member from asset manager with me on set. let's pick up on the dovishness from the fed meeting yesterday. are we likely to see that in the bank of new england comments today? >> i do expect that which is similar to what we have seen in the u.s. however, even though the data that is coming in with wage growth inflation or, you know, gdp rate, is moving in the right direction and inching down from its peak, but the absolute data
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is still quite high. we're at 7.8 which is a sigh of relief now at 7.3. nothing that warrants immediate rate cut from the monetary action perspective. >> we forget that wage growth is still sitting at a 7% handle in the uk. astonishing high number. to be consistent with that price target, it has to be closer to 3% to 4%. there is still a way to go as powell would say. how low does that number need to be and the indicators that the bank of england needs to look at to say now is the time to start thinking about rate cuts? >> that's a very good question. i think i would say it is more of a matter of moving in the right direction rather than hitting a destination. it has to be in a range to start taking decisive action. although wage growth has come down, the unemployment still remains at lows.
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the data has to be seen in construction because what they do not want to be in is the market starts heating up again in terms of inflation purely because of consumer data. >> when you look at it like that, it seems to me that it would be, perhaps, more rational for the bank of england at this point in time to stick with the script, and rates in restrictive territory. one other element that i often think about and the bank of england has been specific with it. they said 50% to 60% of the existing tightening has been fed out to the broader system. what will happen to the system when the full force of the interest rate hikes have been fed through by the end of next year? >> there are several sectors that get directly impacted. uk market is one sector that the fed is thinking about. overall, lending has become difficult for corporates and
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consumer, residential mortgages or cre. i expect the rate will remain range bound despite fully loaded impact of the rates. >> are there any financial stability risks that could stem from that when you think about the house prices or people's inability to continue sustaining the high mortgage rates? >> i don't think so. i'm not expecting any mortgage-led financial crisis. primarily, the uk consumer remains strong not only because of the income due to wage inflation, but the overall leverage that the uk household owns now is lower than what we used to see. the debt-to-disposable income is 126 at the moment. that used to be above 150. uk has been able to hold conditions well although the markets have doubled.
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we see 90,000 at the moment which is a percentage of the outstanding mortgage. >> if you score it up against the back drop of the weak and subdued growth, the bank of england forecast growth is 0.3% the next couple years. that is not translating into the significant distress in the system. that is a bit of an achievement for the bank of england that they have been able to push through this many cuts and not have a visible impact on credit. or credit distress. >> yes. also just from mortgage persp perspective, most of the mortgage owners are on house price which was 230 k pre-covid and now 290. there is room for negative downturn from here. uk has an acute housing
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shortage. the cost of building a new house is going up from here. i expect at some stage the technicals to come in with demand and supply. expect house price appreciation to kick in. >> thank you for joining me he on the show. we have a big afternoon coming up. join me as we break the bank of england decision at 13:00 cet. coverage starts at 14:00 cet. we will hear from the head of the swiss national bank and the head of norges national bank at the times on your screen. that is it for "street signs." i'm joumanna bercehetc. "worldwide exchange" is coming up next. has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for
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it is 5:00 a.m. here at cnbc global headquarters. here is your "five@5." the dow topping 37,000 for the first time ever. the rally is spreading to markets around the world. plus, the powell pivot. the impact of the fed holding rates steady and forecast of three rate cuts next year and the dovish tone. bond traders taking that tone to heart sending trading fresh to six-month lows. shares

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